The timing of Ellington being waived is important, as the stretch provision stipulates specific treatment for players waived on or before August 31. According to NBA Salary Cap guru Larry Coon:

The Kings are also expected to waive Jeremy Tyler, but have yet to officially make the move. His salary does not become guaranteed until September 15th.

After waiving Ellington and trading Terry, the Kings have about $8.5 million worth of room under the luxury tax, assuming they waive all the players they receive from Houston. The Kings also currently only have 12 players under contract (including Omri Casspi, who has yet to officially sign), so there will have to be at least one more official signing before the Kings are at the minimum roster size. This could be where Dmitry Kulagin fits in, although there has yet to be any more information on that front.